RealPage Reports Third Quarter 2017 Financial Results

November 02, 2017 04:05 PM Eastern Daylight Time

RICHARDSON, Texas--(BUSINESS WIRE)--RealPage,
Inc. (NASDAQ:RP), a leading global provider of software and
data analytics to the real estate industry, today announced financial
results for the third quarter ended September 30, 2017.

Third Quarter 2017 Financial Highlights

Total revenue of $169.1 million, an increase of 14% year-over-year;

Net income of $6.8 million, or $0.08 in net income per diluted share,
a year-over-year increase of 62% and 60%, respectively;

Non-GAAP total revenue of $169.8 million, an increase of 15%
year-over-year;

Adjusted EBITDA of $40.0 million, an increase of 21% year-over-year;
and

Non-GAAP net income of $18.4 million, or $0.22 in non-GAAP net income
per diluted share, a year-over-year increase of 19% and 10%,
respectively.

Comments on the News

“We achieved strong revenue growth, strong profit growth and record new
sales bookings during the third quarter,” said Steve Winn, Chairman and
CEO of RealPage. “We are quickly integrating our 2017 acquisitions,
accelerating the achievement of synergy objectives. We are also seeing
results from past investments and continue to invest across our platform
to drive innovation and future revenue growth. All of these areas
underscore our progress helping rental real estate owners translate
actionable insights into improved operational and transactional yields.”

“Our third quarter revenue and adjusted EBITDA performance was in-line
to slightly higher than our guidance when excluding the $3.4 million
impact on renters’ insurance revenue from hurricanes Harvey and Irma,”
said Bryan Hill, CFO and Treasurer of RealPage. “Third quarter financial
performance further supports our progression towards our 2020 goal of $1
billion in revenue and $300 million of adjusted EBITDA.”

2017 Financial Outlook

The company continues to exclude from its outlook any impact related to
its pending acquisition of LRO® (Lease Rent Options) until the closing
date can be determined.

RealPage management expects to achieve the following results during the
fourth quarter ended December 31, 2017:

GAAP total revenue is expected to be in the range of $182.7 million to
$185.7 million;

GAAP net income per diluted share is expected to be in the range of
$0.09 to $0.12;

Non-GAAP total revenue is expected to be in the range of $183.2
million to $186.2 million;

Adjusted EBITDA is expected to be in the range of $44.0 million to
$45.5 million;

Non-GAAP net income per diluted share is expected to be in the range
of $0.25 to $0.26;

Weighted average shares outstanding are expected to be approximately
83.3 million.

RealPage management expects to achieve the following results during the
calendar year ended December 31, 2017:

GAAP total revenue is expected to be in the range of $666.0 million to
$669.0 million;

GAAP net income per diluted share is expected to be in the range of
$0.35 to $0.38;

Non-GAAP total revenue is expected to be in the range of $668.8
million to $671.8 million;

Adjusted EBITDA is expected to be in the range of $160.5 million to
$162.0 million;

Non-GAAP net income per diluted share is expected to be in the range
of $0.91 to $0.92;

Weighted average shares outstanding are expected to be approximately
82.3 million.

Conference Call Information; Presentation Slides

The Company will host a conference call at 5 p.m. ET today to discuss
its financial results. Participants are encouraged to listen to the
presentation via a live web broadcast and view the earnings presentation
at www.realpage.com
on the Investor Relations section. In addition, a live dial-in is
available domestically at 844-889-4333 and internationally at
412-717-9596. A replay will be available at 877-344-7529 or
412-317-0088, passcode 10113863, until November 9, 2017.

About RealPage

RealPage is a leading global provider of software and data analytics to
the real estate industry. Clients use our platform to improve operating
performance and increase capital returns. Founded in 1998 and
headquartered in Richardson, Texas, RealPage currently serves nearly
12,500 clients worldwide from offices in North America, Europe and Asia.
For more information about the company, visit https://www.realpage.com.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains “forward-looking” statements relating to
RealPage, Inc.’s strategy and focus, expected, possible or assumed
future results including its financial outlook for the fourth quarter
and calendar year ending December 31, 2017, possible timing and results
of pending acquisitions, anticipated speed and success of our
acquisition integration efforts and the achievement of related synergy
objectives, the expected results of our investments to drive innovation
and future revenue growth, and RealPage’s long-term revenue and adjusted
EBITDA margin goals. These forward-looking statements are based on
management's beliefs and assumptions and on information currently
available to management. Forward-looking statements include all
statements that are not historical facts and may be identified by terms
such as “expects,” “believes,” “plans,” or similar expressions and the
negatives of those terms. Those forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause actual
results, performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by the
forward-looking statements. The company may be required to revise its
results upon finalizing its review of quarterly and full-year results,
which could cause or contribute to such differences. Additional factors
that could cause or contribute to such differences include, but are not
limited to, the following: (a) the possibility that general economic
conditions, including leasing velocity or uncertainty, could cause
information technology spending, particularly in the rental housing
industry, to be reduced or purchasing decisions to be delayed; (b) an
increase in insurance claims; (c) an increase in client cancellations;
(d) the inability to increase sales to existing clients and to attract
new clients; (e) RealPage’s failure to integrate acquired businesses and
any recent or future acquisitions successfully or to achieve expected
synergies, including the timing and completion of the pending
acquisition of LRO; (f) the timing and success of new product
introductions by RealPage or its competitors; (g) changes in RealPage’s
pricing policies or those of its competitors; (h) legal or regulatory
proceedings; (i) the inability to achieve revenue growth or to enable
margin expansion; and (j) such other risks and uncertainties described
more fully in documents filed with or furnished to the Securities and
Exchange Commission (“SEC”) by RealPage, including its Annual Report on
Form 10-K previously filed with the SEC on March 1, 2017 and its
Quarterly Report on Form 10-Q filed on August 4, 2017. All information
provided in this release is as of the date hereof and RealPage
undertakes no duty to update this information except as required by law.

Explanation of Non-GAAP Financial Measures

The company reports its financial results in accordance with accounting
principles generally accepted in the United States of America, or GAAP.
However, the company believes that, in order to properly understand its
short-term and long-term financial, operational and strategic trends, it
may be helpful for investors to exclude certain non-cash or
non-recurring items when used as a supplement to financial performance
measures in accordance with GAAP. These non-cash or non-recurring items
result from facts and circumstances that vary in both frequency and
impact on continuing operations. The company also uses results of
operations excluding such items to evaluate the operating performance of
RealPage and compare it against prior periods, make operating decisions,
determine executive compensation, and serve as a basis for long-term
strategic planning. These non-GAAP financial measures provide the
company with additional means to understand and evaluate the operating
results and trends in its ongoing business by eliminating certain
non-cash expenses and other items that RealPage believes might otherwise
make comparisons of its ongoing business with prior periods more
difficult, obscure trends in ongoing operations, reduce management’s
ability to make useful forecasts, or obscure the ability to evaluate the
effectiveness of certain business strategies and management incentive
structures. In addition, the company also believes that investors and
financial analysts find this information to be helpful in analyzing the
company’s financial and operational performance and comparing this
performance to the company’s peers and competitors.

The company defines “Non-GAAP Total Revenue” as total revenue plus
acquisition-related and other deferred revenue adjustments. The company
believes it is useful to include deferred revenue written down for GAAP
purposes under purchase accounting rules and revenue deferred due to a
lack of historical experience determining the settlement of the
contractual obligation in order to appropriately measure the underlying
performance of its business operations in the period of activity and
associated expense. Further, the company believes this measure is useful
to investors as a way to evaluate the company’s ongoing performance
because it provides a more accurate depiction of on demand revenue
arising from our strategic acquisitions.

The company defines “Adjusted Gross Profit” as gross profit, plus (1)
acquisition-related and other deferred revenue adjustments, (2)
depreciation, (3) amortization of intangible assets, (4) headquarters
relocation costs, and (5) stock-based expense. The company believes that
investors and financial analysts find these non-GAAP financial measures
to be useful in analyzing the company’s financial and operational
performance, comparing this performance to the company’s peers and
competitors, and understanding the company’s ability to generate income
from ongoing business operations.

The company defines “Adjusted EBITDA” as net income (loss), plus (1)
acquisition-related and other deferred revenue adjustments, (2)
depreciation, asset impairment, and the loss on disposal of assets, (3)
amortization of intangible assets, (4) acquisition-related expense
(income), (5) costs related to the Hart-Scott-Rodino review process, (6)
interest expense, net, (7) income tax expense (benefit), (8)
headquarters relocation costs, and (9) stock-based expense. The company
believes that investors and financial analysts find these non-GAAP
financial measures to be useful in analyzing the company’s financial and
operational performance, comparing this performance to the company’s
peers and competitors, and understanding the company’s ability to
generate income from ongoing business operations.

The company defines “Non-GAAP Product Development Expense” as product
development expense, excluding (1) headquarters relocation costs, and
(2) stock-based expense. The company believes that investors and
financial analysts find these non-GAAP financial measures to be useful
in analyzing the company’s financial and operational performance,
comparing this performance to the company’s peers and competitors, and
understanding the company’s ongoing expenditures related to product
innovation.

The company defines “Non-GAAP Sales and Marketing Expense” as sales and
marketing expense, excluding (1) amortization of intangible assets, (2)
headquarters relocation costs, and (3) stock-based expense. The company
believes that investors and financial analysts find these non-GAAP
financial measures to be useful in analyzing the company’s financial and
operational performance, comparing this performance to the company’s
peers and competitors, and understanding the company’s ongoing
expenditures related to its sales and marketing strategies.

The company defines “Non-GAAP General and Administrative Expense” as
general and administrative expense, excluding (1) loss on disposal of
assets, (2) acquisition-related expense (income), (3) costs related to
the Hart-Scott-Rodino review process, (4) headquarters relocation costs,
and (5) stock-based expense. The company believes that investors and
financial analysts find these non-GAAP financial measures to be useful
in analyzing the company’s financial and operational performance,
comparing this performance to the company’s peers and competitors, and
understanding the company’s underlying expense structure to support
corporate activities and processes.

The company defines “Non-GAAP Operating Expense” as operating expense,
excluding (1) asset impairment and loss on disposal of assets, (2)
amortization of intangible assets, (3) acquisition-related expense
(income), (4) costs related to the Hart-Scott-Rodino review process, (5)
headquarters relocation costs, and (6) stock-based expense. The company
believes that investors and financial analysts find these non-GAAP
financial measures to be useful in analyzing the company’s financial and
operational performance, comparing this performance to the company’s
peers and competitors, and understanding the company’s underlying
expense structure to support ongoing operations.

The company defines “Non-GAAP Operating Income” as operating income
(loss), plus (1) acquisition-related and other deferred revenue, (2)
asset impairment and loss on disposal of assets, (3) amortization of
intangible assets, (4) acquisition-related expense (income), (5) costs
related to the Hart-Scott-Rodino review process, (6) headquarters
relocation costs, and (7) stock-based expense. The company believes that
investors and financial analysts find these non-GAAP financial measures
to be useful in analyzing the company’s financial and operational
performance, comparing this performance to the company’s peers and
competitors, and understanding the company’s ability to generate income
from ongoing business operations.

The company defines “Non-GAAP Net Income” as net income (loss), plus (1)
income tax (benefit) expense, (2) acquisition-related and other deferred
revenue, (3) asset impairment and loss on disposal of assets, (4)
amortization of intangible assets, (5) acquisition-related expense
(income), (6) costs related to the Hart-Scott-Rodino review process, (7)
headquarters relocation costs, (8) amortization of convertible note
discount, (8) stock-based expense, and (9) provision for income tax
expense based on an assumed rate in order to approximate the company’s
long-term effective corporate tax rate; and the company defines
“Non-GAAP Net Income per Diluted Share” as Non-GAAP Net Income divided
by weighted average diluted shares outstanding. The company believes
that investors and financial analysts find these non-GAAP financial
measures to be useful in analyzing the company’s financial and
operational performance, comparing this performance to the company’s
peers and competitors, and understanding the company’s ability to
generate income from ongoing business operations.

The company defines “Non-GAAP On Demand Revenue” as total on demand
revenue plus acquisition-related and other deferred revenue adjustments.
The company believes it is useful to include deferred revenue written
down for GAAP purposes under purchase accounting rules and revenue
deferred due to a lack of historical experience determining the
settlement of the contractual obligation in order to appropriately
measure the underlying performance of the company’s business operations
in the period of activity and associated expense. Further, the company
believes that investors and financial analysts find this measure to be
useful in evaluating the company’s ongoing performance because it
provides a more accurate depiction of on demand revenue arising from our
strategic acquisitions.

The company defines “Ending On Demand Units” as the number of rental
housing units managed by our clients with one or more of our on demand
software solutions at the end of the period. We use ending on demand
units to measure the success of our strategy of increasing the number of
rental housing units managed with our on demand software solutions.
Property unit counts are provided to us by our customers as new sales
orders are processed. Property unit counts may be adjusted periodically
as information related to our clients’ properties is updated or
supplemented, which could result in adjustments to the number of units
previously reported.

The company defines “Average On Demand Units” as the average of the
beginning and ending on demand units for each quarter in the period
presented. The company’s management monitors this metric to measure its
success in increasing the number of on demand software solutions
utilized by our clients to manage their rental housing units, our
overall revenue, and profitability.

The company defines “ACV,” or Annual Client Value, as management’s
estimate of the annual value of the company’s on demand revenue
contracts. The company’s management monitors this metric to measure its
success in increasing the number of on demand units, and the amount of
software solutions utilized by its clients to manage their rental
housing units.

The company defines “RPU,” or Revenue Per Unit, as ACV divided by ending
on demand units. The company monitors this metric to measure its success
in increasing the penetration of on demand software solutions utilized
by its clients to manage their rental housing units.

The company excludes or adjusts each of the items identified below from
the applicable non-GAAP financial measure referenced above for the
reasons set forth with respect to each excluded item:

Non-GAAP tax rate – The company uses a 40.0% tax rate in
order to approximate the Company’s long-term effective corporate tax
rate. The GAAP tax rate includes certain tax items which may include,
but are not limited to: income tax expenses or benefits that are not
related to ongoing business operations in the current year; unusual or
infrequently occurring items; benefits from stock compensation
deductions for tax purposes that exceed the stock compensation expense
recognized for GAAP; tax adjustments associated with fluctuations in
foreign currency re-measurement; certain changes in estimates of tax
matters related to prior fiscal years; certain changes in the
realizability of deferred tax assets and liabilities; and changes in
tax law. We believe excluding these items assists investors and
analysts in understanding the tax provision and the effective tax rate
related to ongoing operations.

Acquisition-related and other deferred revenue – These
items are included to reflect deferred revenue written down for GAAP
purposes under purchase accounting rules and revenue deferred due to a
lack of historical experience determining the settlement of the
contractual obligation in order to appropriately measure the
underlying performance of the company’s business operations in the
period of activity and associated expense.

Asset impairment and loss on disposal of assets – These
items comprise gains (losses) on the disposal and impairment of
long-lived assets, which are not reflective of the company’s ongoing
operations. We believe exclusion of these items facilitates a more
accurate comparison of the company’s results of operations between
periods.

Amortization of intangible assets – These items are
amortized over their estimated useful lives and generally cannot be
changed or influenced by the company after acquisition. Accordingly,
these items are not considered by the company in making operating
decisions. The company does not believe such charges accurately
reflect the performance of its ongoing operations for the period in
which such charges are incurred.

Acquisition-related expense (income) – These items
consist of direct costs incurred in our business acquisition
transactions and the impact of changes in the fair value of
acquisition-related contingent consideration obligations. We believe
exclusion of these items facilitates a more accurate comparison of the
results of the company’s ongoing operations across periods and
eliminates volatility related to changes in the fair value of
acquisition-related contingent consideration obligations.

Costs related to the Hart-Scott-Rodino review process –
This item relates to the company's ongoing Hart-Scott-Rodino Antitrust
Improvements Act review process related to its proposed acquisition of
LRO and recently completed acquisition of On-Site. The company
believes that these significant legal costs are not reflective of its
ongoing operations.

Headquarters relocation costs – These items consist of
duplicative rent and other expenses related to the relocation of our
corporate headquarters and data center. These costs are not reflective
of the company’s ongoing operations due to their non-recurring nature.

Amortization of the convertible note discount – This
items consists of non-cash interest expense related to the
amortization of the discount recognized on the convertible notes
issued in May 2017. Management excludes this item as it is not
indicative of the company’s ongoing operating performance.

Stock-based expense – This item is excluded because
these are non-cash expenditures that the company does not consider
part of ongoing operating results when assessing the performance of
our business, and also because the total amount of the expenditure is
partially outside of its control because it is based on factors such
as stock price, volatility, and interest rates, which may be unrelated
to the company’s performance during the period in which the expenses
are incurred.

Condensed Consolidated Balance Sheets

(in thousands, except share data)

September 30,

December 31,

2017

2016

(unaudited)

Assets

Current assets:

Cash and cash equivalents

$

109,334

$

104,886

Restricted cash

92,560

83,654

Accounts receivable, less allowance for doubtful accounts of $2,998
and $2,468 at September 30, 2017 and December 31, 2016, respectively

The following is a reconciliation of the non-GAAP financial measures
used by RealPage to describe its financial results determined in
accordance with accounting principles generally accepted in the United
States of America ("GAAP"). An explanation of these measures is also
included under the heading “Explanation of Non-GAAP Financial Measures.”

While the company believes that these non-GAAP financial measures
provide useful supplemental information to investors regarding the
underlying performance of our business operations, investors are
reminded to consider these non-GAAP measures in addition to, and not as
a substitute for, financial performance measures prepared in accordance
with GAAP. In addition, it should be noted that these non-GAAP financial
measures may be different from non-GAAP measures used by other
companies, and the company may utilize other measures to illustrate
performance in the future. Non-GAAP measures have limitations in that
they do not reflect all of the amounts associated with our results of
operations as determined in accordance with GAAP.

Non-GAAP Total Revenue

Set forth below is a presentation of the company’s “Non-GAAP total
revenue.” Please reference the “Explanation of Non-GAAP Financial
Measures” section.

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Revenue (GAAP)

$

169,058

$

147,955

$

483,283

$

419,057

Acquisition-related and other deferred revenue

698

(161

)

2,348

(762

)

Non-GAAP total revenue

$

169,756

$

147,794

$

485,631

$

418,295

Adjusted Gross Profit

Set forth below is a presentation of the company’s "Adjusted Gross
Profit." Please reference the "Explanation of Non-GAAP Financial
Measures" section.

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Gross profit (GAAP)

$

99,710

$

83,844

$

283,349

$

238,120

Acquisition-related and other deferred revenue

698

(161

)

2,348

(762

)

Depreciation

2,909

2,834

8,855

8,580

Amortization of intangible assets

3,554

4,296

10,934

12,602

Headquarters relocation costs

-

760

-

2,023

Stock-based expense

1,040

929

2,943

2,506

Adjusted gross profit

$

107,911

$

92,502

$

308,429

$

263,069

Adjusted EBITDA

Set forth below is a presentation of the company’s "Adjusted
EBITDA." Please reference the "Explanation of Non-GAAP Financial
Measures" section.

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Net income (GAAP)

$

6,834

$

4,210

$

21,242

$

9,289

Acquisition-related and other deferred revenue

698

(161

)

2,348

(762

)

Depreciation, asset impairment, and loss on disposal of assets

7,331

7,119

20,935

19,178

Amortization of intangible assets

9,335

7,847

25,351

22,695

Acquisition-related expense (income)

485

(266

)

3,049

(332

)

Costs related to the Hart-Scott-Rodino review process

5,993

-

8,702

-

Interest expense, net

4,813

1,079

8,737

2,888

Income tax (benefit) expense

(7,273

)

3,540

(9,594

)

7,199

Headquarters relocation costs

-

1,353

-

3,552

Stock-based expense

11,764

8,255

35,732

27,383

Adjusted EBITDA

$

39,980

$

32,976

$

116,502

$

91,090

Non-GAAP Product Development Expense

Set forth below is a presentation of the company’s "Non-GAAP Product
Development Expense." Please reference the "Explanation of Non-GAAP
Financial Measures" section.

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Product development expense (GAAP)

$

21,885

$

18,743

$

63,562

$

54,893

Less:

Headquarters relocation costs

-

211

-

541

Stock-based expense

2,098

1,900

6,431

5,246

Non-GAAP product development expense

$

19,787

$

16,632

$

57,131

$

49,106

Non-GAAP Sales and Marketing Expense

Set forth below is a presentation of the company’s "Non-GAAP Sales
and Marketing Expense." Please reference the "Explanation of
Non-GAAP Financial Measures" section.

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Sales and marketing expense (GAAP)

$

42,583

$

33,860

$

116,965

$

101,188

Less:

Amortization of intangible assets

5,781

3,551

14,417

10,093

Headquarters relocation costs

-

220

-

574

Stock-based expense

3,847

1,406

11,241

8,179

Non-GAAP sales and marketing expense

$

32,955

$

28,683

$

91,307

$

82,342

Non-GAAP General and Administrative
Expense

Set forth below is a presentation of the company’s "Non-GAAP General
and Administrative Expense." Please reference the "Explanation of
Non-GAAP Financial Measures" section.

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

General and administrative expense (GAAP)

$

31,004

$

21,677

$

82,625

$

61,955

Less:

Loss on disposal of assets

385

164

472

249

Acquisition-related expense (income)

485

(266

)

3,049

(332

)

Costs related to the Hart-Scott-Rodino review process

5,993

-

8,702

-

Headquarters relocation costs

-

162

-

414

Stock-based expense

4,779

4,020

15,117

11,452

Non-GAAP general and administrative expense

$

19,362

$

17,597

$

55,285

$

50,172

Non-GAAP Operating Expense

Set forth below is a presentation of the company’s "Non-GAAP
Operating Expense." Please reference the "Explanation of Non-GAAP
Financial Measures" section.

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Operating expense (GAAP)

$

95,472

$

75,030

$

263,152

$

218,786

Less:

Asset impairment and loss on disposal of assets

385

914

472

999

Amortization of intangible assets

5,781

3,551

14,417

10,093

Acquisition-related expense (income)

485

(266

)

3,049

(332

)

Costs related to the Hart-Scott-Rodino review process

5,993

-

8,702

-

Headquarters relocation costs

-

593

-

1,529

Stock-based expense

10,724

7,326

32,789

24,877

Non-GAAP operating expense

$

72,104

$

62,912

$

203,723

$

181,620

Non-GAAP Operating Income

Set forth below is a presentation of the company’s "Non-GAAP
Operating Income." Please reference the "Explanation of Non-GAAP
Financial Measures" section.

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Operating income (GAAP)

$

4,238

$

8,814

$

20,197

$

19,334

Acquisition-related and other deferred revenue

698

(161

)

2,348

(762

)

Asset impairment and loss on disposal of assets

385

914

472

999

Amortization of intangible assets

9,335

7,847

25,351

22,695

Acquisition-related expense (income)

485

(266

)

3,049

(332

)

Costs related to the Hart-Scott-Rodino review process

5,993

-

8,702

-

Headquarters relocation costs

-

1,353

-

3,552

Stock-based expense

11,764

8,255

35,732

27,383

Non-GAAP operating income

$

32,898

$

26,756

$

95,851

$

72,869

Non-GAAP Net Income

Set forth below is a presentation of the company’s "Non-GAAP Net
Income" and "Non-GAAP Net Income per Diluted Share." Please
reference the "Explanation of Non-GAAP Financial Measures" section.

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Net income (GAAP)

$

6,834

$

4,210

$

21,242

$

9,289

Income tax (benefit) expense

(7,273

)

3,540

(9,594

)

7,199

(Loss) income before income taxes

(439

)

7,750

11,648

16,488

Acquisition-related and other deferred revenue

698

(161

)

2,348

(762

)

Asset impairment and loss on disposal of assets

385

914

472

999

Amortization of intangible assets

9,335

7,847

25,351

22,695

Acquisition-related expense (income)

485

(266

)

3,049

(332

)

Costs related to the Hart-Scott-Rodino review process

5,993

-

8,702

-

Headquarters relocation costs

-

1,353

-

3,552

Amortization of convertible note discount

2,451

-

3,503

-

Stock-based expense

11,764

8,255

35,732

27,383

Non-GAAP income before income taxes

30,672

25,692

90,805

70,023

Assumed rate for income tax expense (1)

40.0

%

40.0

%

40.0

%

40.0

%

Assumed provision for non-GAAP income tax expense

12,269

10,277

36,322

28,010

Non-GAAP net income

$

18,403

$

15,415

$

54,483

$

42,013

Net income per diluted share

$

0.08

$

0.05

$

0.26

$

0.12

Non-GAAP net income per diluted share

$

0.22

$

0.20

$

0.66

$

0.54

Weighted average outstanding shares - basic (3)

79,838

76,823

79,045

76,615

Weighted average outstanding shares - diluted (3)

82,760

78,124

82,051

77,525

Non-GAAP On Demand Revenue

Set forth below is a presentation of the company’s "Non-GAAP On
Demand Revenue." Please reference the "Explanation of Non-GAAP
Financial Measures" section.

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

On demand revenue (GAAP)

$

161,578

$

140,883

$

462,518

$

400,904

Acquisition-related and other deferred revenue

698

(161

)

2,348

(762

)

Non-GAAP on demand revenue

$

162,276

$

140,722

$

464,866

$

400,142

Ending On Demand Units, Average On Demand
Units, RPU, and ACV

Set forth below is a presentation of the company’s "Ending On
Demand Units," "Average On Demand Units," "RPU," and "ACV." Please
reference the "Explanation of Non-GAAP Financial Measures" section.

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Ending on demand units

12,253

11,251

12,253

11,251

Average on demand units

11,869

11,196

11,406

11,016

ACV

$

708,836

$

565,700

RPU

$

57.85

$

50.28

Non-GAAP Total Revenue Guidance

Set forth below is a presentation of the company’s "Non-GAAP total
revenue" guidance for the three and twelve months ending December
31, 2017. Please reference the "Explanation of Non-GAAP Financial
Measures" section.

Guidance Range for the

Guidance Range for the

Three Months Ending

Twelve Months Ending

December 31, 2017

December 31, 2017

Low (2)

High (2)

Low (2)

High (2)

Revenue (GAAP)

$

182,747

$

185,747

$

666,030

$

669,030

Acquisition-related and other deferred revenue

452

452

2,800

2,800

Non-GAAP total revenue

$

183,199

$

186,199

$

668,830

$

671,830

Non-GAAP Net Income Guidance

Set forth below is a presentation of the company’s "Non-GAAP net
income" and "Non-GAAP net income per diluted share" guidance for the
three and twelve months ending December 31, 2017. Please reference
the "Explanation of Non-GAAP Financial Measures" section.

Guidance Range for the

Guidance Range for the

Three Months Ending

Twelve Months Ending

December 31, 2017

December 31, 2017

Low (2)

High (2)

Low (2)

High (2)

Non-GAAP net income:

Net income (GAAP)

$

7,168

$

10,088

$

28,410

$

31,330

Income tax expense

(1,316

)

(936

)

(10,910

)

(10,530

)

Income before income taxes

5,852

9,152

17,500

20,800

Acquisition-related and other deferred revenue

452

452

2,800

2,800

Asset impairment and loss on disposal of assets

28

28

500

500

Amortization of intangible assets

11,649

11,549

37,000

36,900

Acquisition-related expense

401

271

3,450

3,320

Costs related to the Hart-Scott-Rodino review process

2,348

1,178

11,050

9,880

Amortization of convertible note discount

2,497

2,497

6,000

6,000

Stock-based expense

10,768

10,568

46,500

46,300

Non-GAAP income before income taxes

33,995

35,695

124,800

126,500

Expected effective tax rate (1)

40.0

%

40.0

%

40.0

%

40.0

%

Assumed provision for income tax expense

13,598

14,278

49,920

50,600

Non-GAAP net income

$

20,397

$

21,417

$

74,880

$

75,900

Net income per diluted share

$

0.09

$

0.12

$

0.35

$

0.38

Non-GAAP net income per diluted share

$

0.25

$

0.26

$

0.91

$

0.92

Weighted average outstanding shares - diluted (3)

83,250

83,250

82,330

82,330

Adjusted EBITDA Guidance

Set forth below is a presentation of the company’s "Adjusted EBITDA"
guidance for the three and twelve months ending December 31, 2017.
Please reference the "Explanation of Non-GAAP Financial Measures"
section.

Guidance Range for the

Guidance Range for the

Three Months Ending

Twelve Months Ending

December 31, 2017

December 31, 2017

Low (2)

High (2)

Low (2)

High (2)

Adjusted EBITDA:

Net income (GAAP)

$

7,168

$

10,088

$

28,410

$

31,330

Acquisition-related and other deferred revenue

452

452

2,800

2,800

Depreciation, asset impairment, and loss on disposal of assets

7,165

7,065

28,100

28,000

Amortization of intangible assets

11,649

11,549

37,000

36,900

Acquisition-related expense

401

271

3,450

3,320

Costs related to the Hart-Scott-Rodino review process

2,348

1,178

11,050

9,880

Interest expense, net

5,363

5,263

14,100

14,000

Income tax expense

(1,316

)

(936

)

(10,910

)

(10,530

)

Stock-based expense

10,768

10,568

46,500

46,300

Adjusted EBITDA

$

43,998

$

45,498

$

160,500

$

162,000

(1) We use a non-GAAP tax rate of 40.0% in order to approximate the
Company's long-term effective corporate tax rate. Please reference
the "Explanation of Non-GAAP Financial Measures" section.

(2) Forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause actual results,
performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by
the forward-looking statements. The company may be required to
revise its results upon finalizing its review of quarterly and full
year results, which could cause or contribute to such differences.
All information provided in this release is as of the date hereof
and RealPage, Inc. undertakes no duty to update this information
except as required by law. See additional discussion under
"Cautionary Statement Regarding Forward-Looking Statements" above.

(3) For periods with GAAP net losses and non-GAAP net income, the
weighted-average outstanding shares used to calculate non-GAAP net
income per share includes potentially dilutive securities that were
excluded from the calculation of GAAP net income per share as the
effect was anti-dilutive.